SHANGHAI/SINGAPORE (Reuters) -The Shanghai benchmark advanced to its highest close in more than 3-1/2 years on Wednesday, underpinned by market hopes for an extended trade truce between the United States and China to reach a final deal.
** At the close, the Shanghai Composite index was up 0.45% at 3,633.99 points, marking the third straight session of gains, and booking the highest close since December 31, 2021. Meanwhile, the blue-chip CSI300 index was up 0.24%.
** Defence and coal shares led gains, rising 2.65% and 2.21%, respectively.
** U.S. President Donald Trump said on Tuesday the U.S. was close to a trade deal with China and that he would meet his Chinese counterpart, Xi Jinping, before the end of the year if an agreement is struck.
“We’re getting very close to a deal. We’re getting along with China very well,” Trump said.
** Winnie Chwang, portfolio manager at Matthews Asia, said investors would like to see more clarity from Sino-U.S. trade negotiations.
“I do sense that, while there’s been a bit more interest in revisiting the Chinese markets, there are also still investors that sit on the fence, primarily given the still uncertain nature of trade, and it’s very difficult to make any sort of confident predictions,” Chwang said.
** Jason Lui, head of East Asia strategy at BNP Paribas, said China’s decision to re-impose value-added tax on interest rate income from new treasury, local government and financial bonds encouraged fund re-allocation.
** “By re-imposing the VAT, policymakers may have aimed to redirect funds from the rates market to the equity and the credit market,” Lui said.
“This move would also align with the commitment to ‘strengthen the improving momentum in the capital market’ as outlined by the latest Politburo meeting.”
** In Hong Kong, the benchmark Hang Seng Index inched up 0.03% at 24,910.63 points, while the Hang Seng China Enterprises index fell 0.21% to 8,932.68 points.
** Separately, market attention will shift to a string of domestic economic data due later this week, including trade on Thursday and inflation on Saturday, that will give clues on the health of the economy.
** A Reuters poll showed that China’s export growth probably slowed in July, as manufacturers await clarity on whether Beijing can reach a deal with its top consumer market, the United States, or if Trump will reinstate additional tariffs on goods from China.
(Reporting by Shanghai Newsroom and Rae Wee in Singapore; Editing by Harikrishnan Nair)
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